Bold New Idea

Recently I was in San Diego and getting ready to leave for the airport. I needed transportation to the airport so this was my perfect opportunity to use UberX. I had installed the app on my iPhone a few weeks before so I decided to give ‘em a try. UberX, by the way, is a firm that provides rides/transportation … they are NOT a taxi company.

I was at the Marriott Hotel and clicked for a pick up and selected “black car”. The car arrived in 60 seconds. My driver’s name was Birhanu. The next day I got an email with the bill (link below). It stated…NO charge. The $23.05 fare was waived. Unbeknownst to me, it was a promo for my first trip with UberX. Nice surprise.

The email shows the pickup time, arrival time, name and photo of my driver and the last 4 digits of my credit card. When I got to the airport I signed nothing. I arrived at my destination in a nice clean black 4 x 4 car. My driver was from Ethiopia and spoke very good English. He was professional and friendly. Great experience.

UberX is in more than 130 cities and 36 countries. It’s a Silicon Valley company with a market value of $18.3 billion. It is worth more than Hertz, Whole Foods and Mattel. Unlike these household brands, UberX has been around for just four years. CEO Travis Kalanick said, “Its a technology platform that connects riders and drivers, So you want a ride, we are going to connect you to all the transportation providers that are available in a market, and we’re going to get you the quickest pick up time, highest quality ride, and get it to you at the lowest cost that’s possible.” The company is quadrupling its sales every year and offering employment to hundreds of thousands of drivers and convenience and safety to millions of riders.

Taxi drivers across the world tend to be the same. Often dishonest. Rarely speak English, Poor customer service. When you leave your home to go to the airport do you REALLY TRUST the driver? Are you afraid they will know your house is empty and target your home for a break-in? Do you feel safe? In the Twin Cities where I live the rates are inflated. Very expensive and it takes forever to get a taxi.

Another company called Lyft is also doing very well. Logan Green and John Zimmer started the company in 2012. So far they have raised $333 million in funding compared to UberX which just raised another $1.2 billion in venture capital funding. “Whenever someone is wanting to get from A to B, we want to be their best option for price, availability, friendliness and experience,” Zimmer says. (I also have the Lyft app on my phone and will also use them).

UberX and Lyft are shaking things up.

Naturally, the Taxi drivers across the world are upset. Strikes are taking place in Paris and London. The Taxi industry is heavily regulated. I suspect because it has tended to attract drivers from the bottom of the barrel. There are probably more dishonest taxi drivers than any other industry in the world.

In Moscow I never use a taxi. You pay a lot more and never know what will happen. I use private drivers and often stand on the side of road and just wave your hand toward the ground and in a few minutes a person with their own car will stop. You negotiate the rate and off you go for a very low price. (An early version of UberX).

These ride sharing services are more reliable, transparent and convenient. Your payment information is saved on their systems. That way, drivers know they will get paid and riders don’t have to worry about keeping cash on hand.

The taxi industry is a monopoly. Heavily regulated. In Minneapolis, Paris, London and Madrid local government is trying to protect an industry that is known for bad service and high prices. In Madrid, Julio Moreno, the president of the Spanish Taxi Federation, told local media that “100 percent” of taxi drivers had answered the call for a 24-hour strike. UberX drivers, by contrast are free-lancers who employ GPS-enabled smartphones to link up with passengers. UberX is offering competition where little has previously been available. Plus there are requirements that must be met before a driver can become part of the UberX or Lyft companies:

You must be at least 21 years old and have your own car (2000 or newer) in good working condition.

In order to be approved, you must pass a phone screen, an in-person meeting and vehicle inspection, background and DMV record checks.

Starting on July 3, 2013, UberX started offering experimental UberCHOPPER rides from New York City to The Hamptons for $3,000, via cab and helicopter.

On September 4, 2013, UberX announced its first sports deal. By partnering with the NFL Players Association to promote safe rides for NFL players.

Is UberX a tech company or a transportation company?

The real question to ask is what business are they in? I think they are definitely in the “Customer Service” business. In New York they have already started testing out a courier service. Many people are now selling their cars. They no longer need to pay for parking at home or work and save money on car payments and insurance.

Lessons to be learned:

Customer service is still King.

Price matters.

Firms that have a monopoly today are ripe for competition via technology.

Customers are loyal to great service, speed and price.

Speed is critical. What are you doing to dramatically increase speed in your organization?

When using a taxi do you feel safe?

People with the most money prefer customer service, speed, technology and price.

What are you doing in your organization to enhance the customer experience?

Anybody can lower price, but give a customer something worthwhile, like service that treats him or her in a personal, individual, sincerely concerned manner, and he or she will gladly pay the asking price and return to buy again and again.